Before May 14 2025, letting agents only needed to conduct sanctions checks where monthly rents exceeded €10,000 per month (approximately £8,300).
However, from this date onwards, the threshold will be removed, and agents will be subject to reporting obligations as “relevant firms” under financial sanctions laws.
As a result, sanctions checks are mandatory for all prospective:
- Landlords – at the point of instruction
- Tenants – before concluding a letting agreement
Failure to comply can result in seven-figure fines or even criminal prosecution. Below, we’ll explore the implications of this change for letting agents, the process of conducting sanctions checks, and how you can comply without drowning in paperwork👇
- Tenant and landlord sanctions checks 101
- Sanctions check changes: Implications for letting agents
- How to manually conduct a sanctions check
- Sanctions checks sorted with Goodlord
Tenant and landlord sanctions checks 101
What are sanctions?
Sanctions are restrictions the government sets to prevent financial crime, protect national security, and uphold international obligations. They can apply to people, businesses, or even entire countries. There are several kinds of sanctions, including:
- Financial sanctions – block access to assets, restrict financial services, or stop services from being provided to specific individuals or entities
- Trade sanctions – limit the buying and selling of goods with certain countries
- Immigration sanctions – prevent named individuals from entering or staying in the UK
- Transport sanctions – control aircraft and ship movements associated with sanctioned entities
For letting agents, the key type to understand is financial sanctions. You need to check if a prospective tenant or landlord appears on the UK sanctions list and, if they do, report them immediately to the Office of Financial Sanctions Implementation (OFSI).
Why are the changes to sanctions regulation happening?
Criminals often look to evade sanctions or create complex financial trails that are hard to trace. By removing the €10,000 per month threshold, the Government is closing a loophole and making sure that no sanctioned individuals can enter into rental agreements unnoticed.
While this adds an extra compliance step for letting agents, it helps to protect your business from unknowingly getting involved in financial crime.
Am I affected?
Regardless of size, all letting agents in the UK are affected, irrespective of whether you deal primarily with students or company lets, or work as a relocation agent. So whether you’re a letting agent with one or 1,000 customers, you must comply with these regulations.
When should I conduct a sanctions check?
Tenant sanctions checks should happen after a landlord accepts the tenant’s offer but before the tenancy agreement is signed. In other words, the referencing stage is the ideal time to run a sanctions check. This ensures compliance without screening every single applicant in advance.
Landlord sanctions checks should happen as early as possible in the onboarding process. The landlord is your client, so you should include sanctions screening in Know Your Customer (KYC) checks when they instruct you to let a property.
You should carry out the check before progressing with the tenancy, ideally at the same time as verifying proof of ownership and identity. This ensures you remain compliant and can demonstrate you’ve assessed the risk before taking any payments or advertising the property.
Do I need to screen existing tenants and landlords?
Legally, the rules only apply to prospective tenants and landlords. However, OFSI has suggested that sanctions checks should always have taken place. So, while not required, checking in-situ parties is advisable.
Sanctions check changes: Implications for letting agents
The expansion of sanctions checks regulation will affect you in several ways:
More legal responsibility
Under the new regulations, you must report to OFSI if:
- A client is a designated individual under sanctions laws
- There is evidence or reasonable suspicion of a sanctions breach
- You hold frozen assets
- Knowledge or suspicion came to you in the course of business
You also need to take prevent the rental agreement from being completed as OFSI doesn’t consider ignorance or negligence a defence.
Hefty financial penalties
Failing to comply with the obligations can result in fines “which will be the greater of £1M or 50% of the value of breach”, according to the Government.
For example, a London-based company was fined £1.4M for failing to conduct proper risk assessments, implement adequate anti-money laundering controls, and perform due diligence checks.
In 2024 alone, HMRC issued over £1.6M in fines to 254 estate agents for failing to register for AML supervision.
Administrative burden
Agents are already juggling a growing list of compliance requirements, from changes introduced by Renter’s Rights Bill to shifting Energy Performance Certificate (EPC) regulations. The removal of the sanctions check threshold means you need to jump through another hoop to stay on the right side of the law.
How to manually conduct a sanctions check
Technically, you can conduct sanctions checks yourself. However, that process is manual, time-consuming, and prone to errors. The step-by-step process to conducting a sanctions check is as follows:
- Access the UK sanctions list – the publicly available sanctions list includes individuals and entities subject to sanctions.
- Manually search names – input details into the database to check for potential matches.
- Verify matches – should a potential match be found, you need to investigate further. But, with no unique identifiers like date of birth, address, or unique ID, confirming matches can be challenging.
- Contact OFSI – report to OFSI, even if you’re sure about the match, and wait for their response.
- Document the checks – keep detailed records of all the checklists to prove compliance in case of audits.
This approach to conducting sanctions checks has several major challenges — especially as new names are added to the list every day. Common names can also appear multiple times, making it nearly impossible to confirm the correct individual.
This risk of human error, combined with the fact that it takes weeks for OFSI to respond to requests, makes automation preferable, allowing you to avoid delays and extended void periods.
Sanctions checks sorted with Goodlord
Goodlord has developed a suite of tools to make sanctions compliance simple:
Tenants
Automated PEPs and sanctions checks
Tenants and guarantors are automatically screened during Goodlord’s tenant referencing process, cutting out the hassle of going back and forth with OFSI. Plus, we provide a complete audit trail for your records.
Bulk Back Book check
Goodlord allows you to screen your existing portfolio to make sure all current tenants and guarantors stay compliant. We highlight any issues and delivers clear, auditable results so you can feel confident in every check.
Daily monitoring for 12 months
We keep an eye on tenants and guarantors for 12 months, instantly alerting you if anyone’s added to the PEPs or sanctions list.
Landlords
Anti-money laundering (AML Checks)
Run thorough AML checks on all new and existing landlords with ease. The checks cover:
- Identity validation
- PEPs and financial sanctions
- Mortality and address checks
- Adverse media screening
This article is intended as a guide only and does not constitute legal advice. For more information, visit gov.uk.
Source – Goodlord 12th May 2025